SaaS is Here: Do You Want to Become an IT Dinosaur?

I have some bad news for my fellow old school IT “control freaks” out there…Software-as-a-Service (SaaS) is here and here to stay, and the Clouds are moving in (whether we like it or not).
From one CIO to another, five years from now anyone hosting an ERP system internally is quickly becoming a dinosaur.

Why do I claim to have the crystal ball? Well, I do not. However, I have been around long enough to see all the so-called crazy “pie in the sky” brain-farts eventually become reality. SaaS and Cloud computing are no different, not just more nutty ideas coming your way.

Most CIOs are a conservative lot and at times downright skeptical. We have to be, nothing personal it is our job.
We simply cannot afford to make IT decisions based on the latest article or sales pitch (if you want to be a CIO for long). However, history has shown you cannot fight city hall…forever.

Remember the custom developed vs. package software debate? Today, any CIO planning to write an ERP system in-house is considered a loon. The “mainframe vs. open system” war is another perfect example. How many mainframes do you have in your data center? Furthermore, since “open” client/server platforms were not open, cheap and GUI enough, along came web based technology. The beat goes on.

However, I must say SaaS represents a bigger cultural challenge for many CIOs because they lose their data center. If nothing else, a CIO is the protector of company data and many are not going to give it up easily (whether the risk is real or imagined).

Not Ready for Prime Time (or Just Another Excuse)?

With the transition of any technology, there are always early adopters (i.e. “visionary” CIOs with plenty of money to waste) and late adopters (i.e. those that simply refuse to change).
For most the trick is to take the leap at the right time to avoid the bleeding edge or, on the other extreme, viewed as a barrier to progress.

I must say, most CIOs are very good at spooking a progressive CEO away from new technology directions. Throw the term “business risk” into any conversation and mission accomplished.

Strategic Advantage or IT Cost Reduction?

The old school CIO does have one good argument.
What happened to the concept of “information technology as a strategic enabler”? Let’s face it; any form of IT outsourcing is about cost reduction or tossing out the window anything not perceived as “core” to the success of the organization.

I must admit, it is hard to imagine application software, and the ability to control and leverage it, as “non-mission critical”. One can easily argue these resources must exist internally. After all, you run your business on software and rely on it to deliver product and services to customers, maintain data security, and accurate financial reporting.
What could be more mission critical?

Moreover, the level of support and the depth of functionality of many SaaS application providers do not measure up (at least not yet).

Nevertheless,
it appears IT cost reduction is becoming THE new IT strategic enabler, not what application software can do to improve the business or the ability to control it. Maybe your IT department really is an expensive cost center, after all.

For example, most of the big ERP software vendors are no help. Over the past few years most have only tweaked their software functionality or bought existing bolt-on applications. Nothing new here. There has been no major best practice breakthrough coming from the process improvement gurus or the software industry for years.

Many of the other vendors such as most SaaS providers are simply trying to play catch-up to functionality long considered industry standard.

In the meantime, the big boys have invested the majority of new development in constantly “swapping out” technology infrastructure. In the future, the ERP value-add will continue to be lowering the cost of ownership, technology, deployment strategies, the “out-of-sight, out-of-mind” mentality, and everything else, except software functionality.

SaaS and ERP Software as a Commodity

Gazing into my crystal ball…I predict we will hit a ceiling on ERP software functionality and what clients expect from it, SaaS functionality will catch-up and the cultural barriers within the IT department eventually come crashing down.

When this occurs, ERP software (as sophisticated as it is) becomes a commodity and everyone will flock to SaaS (the low cost model). We are not far off.

My advice to any CIO is jump on the SaaS freight train at the right time before it runs you over.

Steven Phillips is an ERP professional with over 27 years of implementation experience. He is the author of the book “Control Your ERP Destiny”,
one of the best selling ERP titles. The book is
available at Amazon, Google Play, Apple iBooks, Barnes & Noble, Koboand through many other international booksellers.